Linda Thoresen is dealing with a precarious future.

The 66-year-old civil servant is less than a year from pension age but has decided to postpone retirement and continue working to pay down her $170,000 mortgage.

"I just decided this morning to make higher fortnightly payments while I'm working to see if I can get a bit nearer to a lower payout when the time comes," she said.

"There will come a time when I go, no, I really have had enough of work. But unless I have a windfall, I can't see a solution other than having to sell and find somewhere else to live."

When Ms Thoresen bought her two-storey North Fremantle townhouse in Perth, she was in her 40s — about a decade older than most of her friends.

"For quite a while I didn't get rid of the packing boxes that moved me in here thinking, 'oh you never know'," she said.

"I did have that trepidation, and so it has turned out."

The thought of stepping back from work is tempting, she said, but the reality of her financial situation meant it wasn't the best option just yet.

More Australians postponing retirement, retiring with mortgage debt

More older Australians are finding themselves in a similar position.

Census data showed over the past 20 years, the number of Australians aged 55 to 64 who owned their homes outright had almost halved.

Data provided to the ABC by Digital Finance Analytics, from a survey of 52,000 people, found the number of older Australians with a mortgage who planned to retire but changed their minds doubled in the year to September.

The average loan balance in this group was about $190,000, but some owe much more — up to half a million dollars.

About three-quarters of the retirees with a mortgage owe more than they have in superannuation, and more than 50 per cent of 55-65-year-olds expect to sell their property or use their superannuation to repay their mortgage.

Finance analyst and founder of Digital Finance Analytics, Martin North, said more people were remaining in the workforce for longer because of "a significantly higher mortgage liability than they expected".

The impact was typically felt in Melbourne and Sydney but it was beginning to spread out, he said.

"I'm seeing people struggling in Hobart, Adelaide, Brisbane and Perth as well. So this is a national problem."

Mr North said that was being driven by higher interest rates and people pulling more equity out of their property for their own needs or to help their children buy a home.

"I've been arguing for some time that the whole concept of the 'bank of mum and dad' is probably the least understood factor in what's driving the property market at the moment and what's driving household finance."

Mr North said the Reserve Bank of Australia should be looking into this issue because high house prices forced more first home buyers to rely on their parents for financial help to string together a housing deposit — the so-called 'bank of mum and dad'.

That could, ironically, leave the 'mums and dads' more vulnerable to a potential drop in house prices, if they delay paying down their own home loans and then need to sell.

More retirees rely on pension

While some older Australians may be thinking of using their superannuation to pay off their mortgage, for others that wasn't an option.

"The other factor that we found in our surveys was that less people now have the capacity in their superannuation to pay off their mortgage," Mr North said.

Michael Fotheringham, managing director at the Australian Housing and Urban Research Institute, said that was forcing some people to sell their homes and rent.

"[That's] been increasing for the last decade or more," he said.

There's also a long-term effect on the economy when people use their superannuation to pay off a home loan, he said.

"It means they're more likely to draw on the pension to get through [retirement].

"People using their super to cover mortgages end up dependent on pensions, which places a financial strain on government resources."

The federal government's 2023 Intergenerational Report echoed these concerns, warning of the risks posed by retirees still burdened by mortgage debt.

The report cited rising housing costs that have far outpaced wage growth as a key factor, along with the broader cost of living pressures.

First home buyers are getting older

It's not just current retirees staring down the barrel of a lacklustre retirement.

Data from mortgage broker Lendi shows over the past four years, the proportion of first-home buyers over 37 years old, increased 16 per cent.

Mel Smith is an Aussie Home Loans franchisee — Aussie is owned by Lendi.

She said it data was a clear sign that if house prices continued climbing, that age could get even older, and with the average home loan lasting 30 years, many may find themselves reaching retirement age still paying it back.

Ms Smith said banks were becoming more concerned with what customer's exit strategies were.

"We work towards strategies of either having it paid down prior [to retirement], or have a plan in place to scale down or relocate into something that you can afford later on in life, without a mortgage."

But she said those plans were not front of mind for many of her clients.

"Customers do come in with a level of anxiety about still having these loans into retirement. A lot of people are also just thinking, it's a future problem — they kick the can down the road."

Linda Thoresen has continued to try and find a solution that lets her stay put.

"There's not a whole lot of downsizing to be done," she said.

"It may be more about finding a less attractive or lower-quality home, and that's emotionally difficult."

Despite the challenges, she's trying to find solace in the present.

"It could be good for me to keep working and live life as it is," she said.